American automaker Tesla is still number one in the U.S. electric vehicle market, but its market share is declining. In the first three quarters of this year, Tesla’s share of the U.S. electric vehicle market fell to 65 percent from 71 percent a year ago and from 79 percent in 2020, according to a report from S&P Global Mobility. S&P predicts Tesla’s share will drop to less than 20 percent by 2025.
Tesla’s decline in US market share was expected, but the pace may worry investors. Tesla shares have lost almost half their value since the beginning of this year. Tesla founder Elon Musk has recently focused mainly on internet company Twitter, which he bought in late October for $44 billion. This raises concerns among investors that Musk is too distracted and that Tesla is devoting enough time to running Tesla.
Tesla is now slowly losing its domince in the US market to sub-$50,000 electric vehicles, where Tesla is not yet a real competitor, the report said, according to S&P. The cheapest Tesla Model 3 electric car with delivery starts at around $48,200, but these cars tend to sell for more due to additiol fees for additiol equipment.
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“Tesla’s position is changing as new and more affordable models come out that offer the same or better technology and performance,” S&P said in a statement. “As both choice and consumer interest in electric vehicles grow, it will be difficult for Tesla to maintain a domint position going forward,” S&P adds.
Earlier this week, Reuters reported, citing sources familiar with the situation, that Tesla is developing a new version of the Model 3 electric car in order to reduce production costs. Musk said in October that Tesla was working on a next-generation model that would be smaller and cheaper than previous models.
The market for electric vehicles is still very small. Of the more than ten million vehicles registered in the US in the first three quarters of this year, only about 525,000 vehicles, or about five percent, were electric vehicles. During the same period last year, 334,000 vehicles were registered, less than three percent of the total number of registrations. However, thanks to the success of Tesla and government incentives, even traditiol car companies have begun to pay more attention to this market.